A firm purchased an asset with a 5-year life for $90,000, and it cost $10,000 for shipping and installation. According to the current tax laws the cost basis of the asset at time of purchase is
A) $100,000.
B) $95,000.
C) $80,000.
D) $70,000.

Question

Quizplus · Accepted Answer

The cost basis of an asset includes its purchase price plus any additional costs necessary to get it into use. In this case, the purchase price of $90,000 plus the shipping and installation costs of $10,000 equals a total cost basis of $100,000.

A Firm Purchased an Asset with a 5-Year Life for $90,000